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					                                        Chapter 30

                    Bankruptcy Law

Case 30.1
463 F.3d 902, Bankr. L. Rep. P 80,707, 39 Employee Benefits Cas. 1289, 06 Cal. Daily Op.
Serv. 8501, 2006 Daily Journal D.A.R. 12,207, Pens. Plan Guide (CCH) P 23997K
Lisa R. HEBBRING, Appellant,
U.S. TRUSTEE, Appellee.
No. 04-16539.
Submitted May 19, 2006.
, Circuit Judge.
We must decide whether a debtor seeking protection under Chapter 7 of the Bankruptcy Code may ever include voluntary
contributions to a retirement plan as a reasonably necessary expense in calculating his disposable income. We hold that the
Bankruptcy Code does not disallow such contributions per se, but rather requires courts to examine the totality of the
debtor's circumstances on a case-by-case basis to determine whether retirement contributions are a reasonably necessary
expense for that debtor. In this case the bankruptcy court did not clearly err in finding that Lisa Hebbring's voluntary
retirement contributions are not a reasonably necessary expense based on her age and financial circumstances, and thus
that she has sufficient disposable income to repay her creditors. We therefore affirm the district court's decision affirming
the bankruptcy court's dismissal of Hebbring's petition on the ground that allowing her to proceed under Chapter 7 would be
a substantial abuse of the Code.
          This case arose prior to the enactment and effective date of the Bankruptcy Abuse Prevention and Consumer
          Protection Act of 2005 (BAP-CPA), and BAPCPA's amendments to the Bankruptcy Code are not relevant to the
          issues before us. Accordingly, all references herein are to the pre-BAPCPA Code in effect when Hebbring's petition
          was filed. -.
Lisa Hebbring filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Nevada on
June 5, 2003, seeking relief from $11,124 in consumer credit card debt. Her petition and accompanying schedules show that
Hebbring owns a single-family home in Reno, Nevada valued at $160,000, on which she owes $154,103; a 2001 Volkswagen
Beetle valued at $14,000, on which she owes $18,839; and miscellaneous personal property valued at $1,775. Hebbring
earns approximately $49,000 per year as a customer service representative for SBC Nevada. Her petition reports monthly
net income of $2,813 and monthly expenditures of $2,897, for a monthly deficit of $84. In calculating her income, Hebbring

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excluded a $232 monthly pre-tax deduction for a 401(k) plan and an $81 monthly after-tax deduction for a retirement savings
bond. When she filed for bankruptcy Hebbring was thirty-three years old and had accumulated $6,289 in retirement
savings. The United States Trustee (“Trustee”) moved to dismiss Hebbring's petition for substantial abuse, see , arguing that
she should not be allowed to deduct voluntary retirement contributions *905 from her income and that her recent paystubs
showed that her gross income was higher than she had claimed. As a result, the Trustee contended, Hebbring's monthly net
income was actually $3,512, leaving her $615 per month in disposable income, sufficient to repay 100% of her unsecured debt
over three years. Opposing the Trustee's motion, Hebbring argued that her recent paystubs were not representative of her
monthly income because they included overtime and premium wages received during a one-time sales promotion. She
further stated that her petition mistakenly omitted veterinary expenses and homeowner's association and insurance fees,
and under-reported her monthly food expense by $200 to $250. She included receipts to corroborate these claims, but she
never amended her expense schedule.
The bankruptcy court granted the Trustee's motion to dismiss, stating in relevant part:
[Hebbring's retirement contributions] wouldn't be meaningful if she owed fifty thousand dollars. But she doesn't owe that
much.... She only owes a small amount of money.... She's not an older person. She's a young person.... I have consistently
held that putting away money in 401[k]'s is inconsistent with what you're trying to do.... You can't be looking after yourself
and saving money at the expense of your creditors.... [S]he has disposable income that she's otherwise trying to save through
different plans; [a]nd she is also using part of her money to support her animals; [a]ll of which, I think she can pay
something on account of her creditors .... I think it would be an abuse of Chapter 7 for her to be able to discharge all these
debts and not pay something to these creditors .... [a]nd so I am going to grant the motion to dismiss unless within thirty
days she files a Chapter 13 and agrees to pay ... a meaningful amount to the creditors. Hebbring appealed the dismissal to
the Ninth Circuit Bankruptcy Appellate Panel. The Trustee transferred the appeal to the United States District Court for
the District of Nevada, which affirmed the bankruptcy court.           Hebbring filed this appeal challenging, inter alia, the
bankruptcy court's finding that her contributions to her 401(k) plan and savings bond are not a reasonably necessary
We have jurisdiction pursuant to . On appeal from a district court's affirmance of a bankruptcy court decision, we
independently review the bankruptcy court's decision, without giving deference to the district court. .            We review a
bankruptcy court order dismissing a Chapter 7 case for abuse of discretion; legal conclusions are reviewed de novo, and
factual findings are reviewed for clear error. . We review for clear error a bankruptcy court's fact-intensive determination
that an expense or property interest is not reasonably necessary for a debtor's support. See .
The purpose and structure of the Bankruptcy Code, as well as our precedent, compel the conclusion that voluntary
contributions to a retirement plan may be a reasonably necessary expense for some debtors. Courts must therefore conduct
a fact-specific inquiry to determine whether a debtor who saves for retirement at the expense of his creditors may
nevertheless proceed under Chapter 7. The bankruptcy court erred in suggesting that voluntary retirement contributions are
per se not *906 reasonably necessary. However, the bankruptcy court's alternative finding that Hebbring's retirement
contributions are not reasonably necessary based on her age and financial circumstances, and that she is therefore capable of
paying her unsecured debts, is not clearly erroneous; nor did it abuse its discretion in dismissing her Chapter 7 petition.
We therefore affirm.
At the time Hebbring filed her petition, provided that a court “may dismiss a case filed by an individual debtor under this
chapter whose debts are primarily consumer debts ... if it finds that the granting of relief would be a substantial abuse of the
provisions of this chapter.” In determining whether a petition constitutes a substantial abuse of Chapter 7, we examine the
totality of the circumstances, focusing principally on whether the debtor will have sufficient future disposable income to fund
a Chapter 13 plan that would pay a substantial portion of his unsecured debt. see also (“[A] debtor's ability to pay his debts
will, standing alone, justify a dismissal.”). To calculate a debtor's disposable income, we begin with current monthly income
and subtract amounts “reasonably necessary to be expended ... for the maintenance or support of the debtor or a dependent
of the debtor.” .
Neither the Bankruptcy Code nor the Code's legislative history defines “reasonably necessary.” Some courts, including the
Third and Sixth Circuits, have employed a per se rule that voluntary contributions to retirement plans are never a
reasonably necessary expense. See, e.g., ; ; ; . These courts typically emphasize that allowing debtors to exclude
retirement contributions from disposable income at the expense of unsecured creditors is unfair. See, e.g., . In contrast,
other courts, including the Second Circuit, have adopted a case-by-case approach, under which contributions to a retirement
plan may be found reasonably necessary depending on the debtor's circumstances. See, e.g., ; ; , as amended.
We believe this latter approach better comports with Congress's intent, as expressed in the language, purpose, and structure
of the Bankruptcy Code. By not defining the phrase “reasonably necessary” or providing any examples of expenses that

categorically are or are not reasonably necessary, see , the Code suggests courts should examine each debtor's specific
circumstances to determine whether a claimed expense is reasonably necessary for that debtor's maintenance or support.
See . We find no evidence that Congress intended courts to employ a per se rule against retirement contributions, which
may be crucial for debtors' support upon retirement, particularly for older debtors who have little or no savings. See, e.g., ; .
Where Congress intended courts to use a per se rule rather than a case-by-case approach in classifying financial interests or
obligations under the Bankruptcy Code, it has explicitly communicated its intent. See, e.g., (exempting from property of the
estate several specific types of property, including interests in personal jewelry, a debtor's tools of trade, *907 and the right
to receive payments from a pension plan). Congress's decision not to categorically exclude any specific expense, including
retirement contributions, from being considered reasonably necessary is probative of its intent. See, e.g., (“[O]missions are
the equivalent of exclusions when a statute affirmatively designates certain persons, things, or manners of operation.”); (“It
is well settled that in interpreting a statute we must consider each provision in the context of the statute as a whole.”).
Requiring a fact-specific analysis to determine whether an expense is reasonably necessary is sound policy because it
comports with the Code's approach to identifying substantial abuse of the Chapter 7 relief provisions. We have consistently
held that does not include a “bright line test” for substantial abuse, but rather “commit[s] the question of what constitutes
substantial abuse to the discretion of bankruptcy judges within the context of the Code.” see also . “Congress chose neither
to define „substantial abuse‟ in the 1984 Act nor to leave specific guidance in legislative history. Congress thus left a flexible
standard enabling courts to address each petition on its own merit.” (footnote omitted). That Congress granted courts the
discretion to identify substantial abuse necessarily suggests it intended courts to have the discretion to answer the
subsidiary question of whether particular expenses are reasonably necessary.
In light of these considerations, and in the absence of any indication that Congress sought to prohibit debtors from
voluntarily contributing to retirement plans per se, we conclude that bankruptcy courts have discretion to determine
whether retirement contributions are a reasonably necessary expense for a particular debtor based on the facts of each
individual case. See . In making this fact-intensive determination, courts should consider a number of factors, including
but not limited to: the debtor's age, income, overall budget, expected date of retirement, existing retirement savings, and
amount of contributions; the likelihood that stopping contributions will jeopardize the debtor's fresh start by forcing the
debtor to make up lost contributions after emerging from bankruptcy; and the needs of the debtor's dependents. See
Courts must allow debtors to seek bankruptcy protection while voluntarily saving for retirement if such savings appear
reasonably necessary for the maintenance or support of the debtor or the debtor's dependents. See . We are not dissuaded
by cases endorsing a per se rule. See, e.g., . The Bankruptcy Code and congressional intent control how courts should
identify reasonably necessary expenses. A per se rule is inappropriate in the face of Congress's delegation of discretion to
bankruptcy courts to evaluate expenses on a case-by-case basis. Nor do we believe that “the case by case approach ... is
potentially difficult to apply and may lead to disparate results even before the same judge.” . The case-by-case approach
we adopt should be no more difficult to apply to retirement contributions than to other forward-looking expenses that
bankruptcy courts must evaluate for reasonableness, such as life insurance premiums, see, e.g., ; private school tuition for
debtors' children, see, e.g., *908; ; or home maintenance costs, see, e.g., .
Here, the bankruptcy court suggested that it employed a per se rule against retirement contributions, but also found, in the
alternative, that Hebbring's retirement contributions are not a reasonably necessary expense based on her age and specific
financial circumstances. This finding is not clearly erroneous. When she filed her bankruptcy petition, Hebbring was only
thirty-three years old and was contributing approximately 8% of her gross income toward her retirement.                 Although
Hebbring had accumulated only $6,289 in retirement savings, she was earning $49,000 per year and making mortgage
payments on a house.          In light of these circumstances, the bankruptcy court's conclusion that Hebbring's retirement
contributions are not a reasonably necessary expense is not clearly erroneous.             Compare, e.g., (holding that 401(k)
contributions of less than 2% of debtors' $71,280 annual gross income were not a reasonably necessary expense for a married
couple in their early thirties), with (holding that 401(k) contributions of 10% of debtor's $36,228 annual gross income were a
reasonably necessary expense for a fifty-six-year-old debtor with total retirement savings of $9,000).
Hebbring also challenges the bankruptcy court's ruling on three bases that require little discussion. She contends that the
bankruptcy court should have held an evidentiary hearing; that it erred in finding, based on schedules she submitted, that
she had the ability to fund a Chapter 13 plan; and that it erred in concluding that the Trustee met his burden of
demonstrating substantial abuse by a preponderance of the evidence.
The bankruptcy court was not required to hold an evidentiary hearing because there were no disputed issues of material
fact. See . Although in her opposition to the Trustee's motion to dismiss Hebbring argued that her expenses were higher
than she had stated in her expense schedule, she never filed an amended schedule. Cf. (“No court approval is required for
an amendment, which is liberally allowed.”). Nor does . In Harris, unlike here, the bankruptcy court concluded that the
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debtors' expenses were unreasonable and dismissed their Chapter 7 petition for substantial abuse without making any
factual findings or taking any evidence regarding the reasonableness of the disputed expenses. Id. at 258, 260.
The bankruptcy court did not err in concluding that Hebbring has the ability to fund a Chapter 13 plan. The court
calculated Hebbring's income and expenses from the very schedules Hebbring submitted to support her petition for relief
from her debts. These uncontested schedules demonstrate that, including her voluntary retirement plan contributions,
Hebbring has $172 per month in disposable income, sufficient to repay 56% of her unsecured debt over three years or 93%
over five years (not including interest on the debt). Even subtracting attorneys' and trustee fees for a Chapter 13 plan from
Hebbring's disposable income, she can still pay 27% over three years or 65% over five years (not including interest on the
debt). The bankruptcy court thus did *909 not err in finding that Hebbring is able to fund “a substantial portion of the
unsecured claims” in a Chapter 13 plan. see also (debtors seeking Chapter 7 relief who could pay 14% of unsecured debt
over three years had the ability to fund a Chapter 13 plan).
We find no merit in Hebbring's muddled argument that the Trustee failed to meet its burden of proving substantial abuse.
The Trustee relied on Hebbring's own schedules in arguing that Hebbring has the ability to fund a Chapter 13 plan. To the
extent Hebbring contends that the bankruptcy court made inadequate factual findings, she ignores the record. Based on
Hebbring's schedules, the district court found that her retirement contributions are not a reasonably necessary expense and
that she has sufficient disposable income to fund a Chapter 13 plan.          As noted above, these findings are not clearly
erroneous, and the bankruptcy court therefore did not abuse its discretion in dismissing her petition for substantial abuse.
See . In re Hotel Hollywood, on which Hebbring relies, is inapposite because there “the bankruptcy court did not make
findings of fact” and the appellate court was therefore “unable to ascertain the legal grounds on which the [bankruptcy] court
reached its decision.” .
For the foregoing reasons, the district court's order affirming the bankruptcy court's order dismissing this case is

Case 30.2
494 F.3d 1320, Bankr. L. Rep. P 80,991, 20 Fla. L. Weekly Fed. C 953

United States Court of Appeals,
Eleventh Circuit.
In re Keldric Dante MOSLEY, Debtor.
Educational Credit Management Corp., Plaintiff-Appellant,
Keldric Dante Mosley, Defendant-Appellee.
No. 06-10349.
Aug. 9, 2007.

 JOHN R. GIBSON, Circuit Judge:
 Educational Credit Management Corporation (“Educational Credit”) appeals from the
district court's decision affirming the bankruptcy court's order discharging Keldric Dante Mosley's student loan debt on the
basis of undue hardship. We affirm.
 Mosley incurred several student loans while attending Alcorn State University, where
he majored in history, between 1989 and 1994. At Alcorn State, Mosley joined the Army Reserve Officers' Training Corps.
During his training in the summer of 1993, Mosley's hip and back were injured when he fell from a tank. Medical problems
associated with his injury ultimately led him to resign his commission.
 In the spring of 1994, Mosley left Alcorn State
because it was not offering a class he needed to graduate and because he believed his mother's health was deteriorating. He
lived with his mother in Atlanta, Georgia, from 1994 to 1999. During this time, Mosley had brief stints at several jobs,
including jobs at Bruno's Supermarket, United Parcel Service, City Sanitation, and a moving company. He attempted to
attend heavy equipment school to learn a trade, but he was unable to complete the training or keep any of his jobs because
he was depressed, drank heavily, and experienced physical limitations from his injury. Mosley also attempted to go back to
school but could not obtain financial aid because of the debts he had incurred to attend Alcorn State. He filed for Chapter 7

bankruptcy pro se in December of 1999 and obtained a discharge; the discharge did not include his student loans.
 In 2000,
Mosley's mother committed him to Georgia Regional Hospital, a state-supported mental health facility, where he stayed for
approximately one to two weeks and was diagnosed with anxiety and depression. After his release, Mosley sought treatment
for depression and chronic back pain at the Department of Veterans' Affairs. Veterans' Affairs placed him on prescription
medication for depression, anxiety, back pain and swelling, and high blood pressure, which he continues to take but which
makes him unable “to function.”
 Mosley is registered with the Georgia Department of Labor and has sought work through
the labor pool since 2000 with little success. He worked at an airport for a short time but was unable to meet the physical
demands of the job because his medication made him groggy and he cannot do heavy lifting. His monthly income consists
primarily of disability benefits of $210 from the Veterans' Administration, and he relies on food stamps to survive. Mosley
has been homeless since 2000 and frequently sleeps at his aunt's house. He has no car.
 Mosley's student loans total
approximately $45,000 and have been in default since 1996. He has not made any payments since then and, in 2004, filed a
pro se motion to reopen his bankruptcy case and cease collection activities. The bankruptcy court granted the motion, and
Mosley filed an adversary proceeding against USA Funds, the loan holder at the time, seeking discharge of his student loans
on the basis of undue hardship. Mosley's loans were transferred to Educational Credit, which accepts title to certain federal
student loan accounts on which the borrower has filed bankruptcy, and Educational Credit intervened and replaced USA
Funds in the action.
 Proceeding pro se, Mosley was the sole witness and testified before the bankruptcy court about his
medical problems, work history, and living situation. He introduced Social Security and Medicare earnings statements
showing that his annual taxable earnings between 1994 and 2004 have never exceeded $7,700 and have been as low as
$1,287. The court also admitted a letter from an Emory University professor, Dr. Angel Iglesias, on Veterans' Affairs
letterhead stating that Mosley had been diagnosed with hypertension, depression, anxiety, and lower back pain but that x-
rays did not show significant pathology. Educational Credit objected to several other doctors' letters that Mosley attempted
to introduce, and the bankruptcy court reluctantly excluded them because they had not been properly authenticated. The
bankruptcy court granted the discharge of Mosley's student loans even without these letters, however, reasoning that
Mosley's testimony that he was in a vicious cycle of illness and homelessness that prevented him from working was credible
and demonstrated that repayment would be an undue hardship. The bankruptcy court initially issued these findings orally
and entered a short written order granting the discharge; about a month after the hearing, it issued and published a
supplemental order restating its findings and rationale and citing the relevant case law. In re Mosley, 330 B.R. 832
 Educational Credit appealed to the district court, arguing that Mosley failed to meet his burden
because he failed to produce medical evidence to corroborate his testimony that his disabilities would prevent him from
repaying his loans. It also moved to strike the supplemental order the bankruptcy court issued for publication after the
appeal was filed. The district court denied the motion to strike, reasoning that the supplemental order did not alter any of
the findings of fact or conclusions of law the bankruptcy court had reached orally in granting Mosley's discharge, but only
elaborated on its rationale, and thus was not prejudicial to Educational Credit. The district court affirmed the discharge,
summarily approving of the reasoning set forth in the bankruptcy court's supplemental order and concluding that Mosley
produced sufficient evidence of his likely inability to repay the loans. Educational Credit appealed to this Court, arguing that
Mosley failed to meet his burden of proof and that the bankruptcy court lacked jurisdiction to enter the supplemental
 [1] [2] [3] In this appeal from the district court's affirmance of the bankruptcy court's order, we review the
bankruptcy court's decision. See Educ. Credit Mgmt. Corp. v. Frushour (In re Frushour), 433 F.3d 393, 398 (4th Cir.2005).
Educational Credit challenges the bankruptcy court's conclusion that repayment of the student loans would impose an undue
hardship on Mosley, which is a mixed question of law and fact. Id. We review the bankruptcy court's factual findings for
clear error and its legal conclusions de novo. See Hemar Ins. Corp. of Am. v. Cox (In re Cox), 338 F.3d 1238, 1241 (11th
 [4] [5] The Bankruptcy Code provides that student loans generally are not to be discharged. 11 U.S.C. §
523(a)(8). A narrow exception is made, however, where “excepting such debt from discharge ... will impose an undue
hardship on the debtor and the debtor's dependents.” Id. The Bankruptcy Code does not define “undue hardship,” but this
Circuit has joined several others in adopting the standard set forth in Brunner v. New York State Higher Education Services
Corp., 831 F.2d 395, 396 (2d Cir.1987). See In re Cox, 338 F.3d at 1241. To establish undue hardship, the Brunner standard
requires the debtor to prove by a preponderance of the evidence:
 (1) that the debtor cannot maintain, based on current
income and expenses, a “minimal” standard of living for [himself] and [his] dependents if forced to repay the loans; (2) that
additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the
repayment period of the student loans; and (3) that the debtor has made good faith efforts to repay the loans.
 Brunner, 831
F.2d at 396.
 [6] Educational Credit does not contest that Mosley has satisfied the first requirement, an inability to
maintain a minimal standard of living, as he lives below the poverty line and has for several years. It contends that the
bankruptcy court improperly relaxed Mosley's evidentiary burden on the second and third requirements in light of his status
as an impoverished pro se litigant. The bankruptcy court concluded that Mosley established undue hardship with his
credible testimony that he has tried to obtain work but, for ten years, his “substantial physical and emotional ailments” have
prevented him from holding a steady job. While the letter from Dr. Iglesias corroborates Mosley's testimony that he has been
                                                                             CHAPTER 30: BANKRUPTCY LAW                     455

diagnosed with several illnesses, the court's conclusion that those illnesses are likely to impair Mosley's ability to repay his
loans was based on Mosley's testimony. Citing several bankruptcy court cases and two Courts of Appeals cases, Educational
Credit argues that corroborating medical evidence independent from the debtor's testimony is required to make the second
Brunner showing where medical disabilities are the “additional circumstances” that make it unlikely the debtor will be able
to repay his loans.
 The Sixth Circuit recently rejected Educational Credit's position in Barrett v. Educational Credit
Management Corp., 487 F.3d 353, 356 (6th Cir.2007). In Barrett, the bankruptcy court discharged the debtor's student loans
after concluding that the debtor established undue hardship under Brunner because various medical conditions, particularly
avascular necrosis, caused him severe pain that prevented him from working and made employers reluctant to hire him. Id.
at 357-58. The bankruptcy court's conclusion was based largely on the debtor's testimony at the adversary proceeding, where
the debtor also introduced tax records and a letter from his doctor that documented his cancer treatment but not his
avascular necrosis. Id. at 361. The Sixth Circuit concluded that this evidence was sufficient to support the conclusion of
undue hardship, rejecting Educational Credit's argument that the debtor was required to produce corroborating medical
evidence. Id. at 359. The court reasoned that requiring corroborating evidence when the debtor cannot afford expert
testimony or documentation “imposes an unnecessary and undue burden on [the debtor] in establishing his burden of proof.”
Id. at 360 (quoting Bankruptcy Appellate Panel opinion) (internal quotation marks omitted). As the court explained, the
crucial requirement is that the debtor show how his medical conditions prevent him from working, id., and this can be
accomplished by an array of evidence, including the debtor's credible testimony, id. at 361.
 We are persuaded by Barrett
and decline to adopt a rule requiring Mosley to submit independent medical evidence to corroborate his testimony that his
depression and back problems were additional circumstances likely to render him unable to repay his student loans. We see
no inconsistency between Barrett 's holding that the debtor's detailed testimony was sufficient evidence of undue hardship
and the Courts of Appeals cases cited by Educational Credit where debtors' less detailed testimony was held to be
insufficient. See In re Tirch, 409 F.3d 677, 682 (6th Cir.2005) (debtor's testimony insufficient to show undue hardship
because it did not explain how her health problems prevented her from working); Brightful v. Penn. Higher Educ. Assistance
Agency, 267 F.3d 324, 328 (3d Cir.2001) (debtor's testimony insufficient because it lacked detail to explain how her condition
impaired her ability to work). In particular, we observe that Barrett specifically stated that Tirch does not require a debtor to
produce expert testimony to meet his burden of showing that his medical conditions impair his ability to work, refuting
Educational Credit's interpretation of Tirch. Barrett, 487 F.3d at 359.
 [7] Educational Credit also argues that Mosley's
medical prognosis is a subject requiring specialized medical knowledge under Fed.R.Evid. 701 and 702, made applicable to
the adversary proceeding in bankruptcy by Bankruptcy Rule 9017, and that Mosley was not competent to give his opinion on
this matter. Mosley, however, did not purport to give an opinion on his medical prognosis, but rather testified from personal
knowledge about how his struggles with depression, back pain, and the side effects of his medication have made it difficult
for him to obtain work. The bankruptcy court did not abuse its discretion by admitting this testimony. See Barrett, 487 F.3d
at 362 (while debtor cannot give an opinion on his prognosis or the medical cause of his ailments, he can and must testify
about how his disabilities affect his ability to work to carry his burden).
 [8] We now turn to Educational Credit's
argument that the record does not support a conclusion of undue hardship because Mosley's testimony did not establish the
last two parts of the Brunner standard, that he likely will be unable to repay his student loans in the future and that he has
made good faith efforts to repay the loans. Educational Credit points out that the Brunner requirements are “demanding”
ones, Brightful, 267 F.3d at 328, and contends that the bankruptcy court failed to apply them with the appropriate level of
rigor. The bankruptcy court indeed expressed concern that a strict application of Brunner treats too harshly debtors living in
abject poverty, citing Educational Credit Management Corp. v. Polleys, 356 F.3d 1302 (10th Cir.2004); however, the court
ultimately analyzed Mosley's case under the complete Brunner framework as our precedent requires. Under Brunner, undue
hardship does not exist simply because the debtor presently is unable to repay his or her student loans; the inability to pay
must be “likely to continue for a significant time,” Cox, 338 F.3d at 1242, such that there is a “certainty of hopelessness” that
the debtor will be able to repay the loans within the repayment period, Brightful, 267 F.3d at 328 (citation and internal
quotation omitted).
 [9] The bankruptcy court correctly concluded that Mosley's testimony met this standard. In showing
that “additional circumstances” make it unlikely that he will be able to repay his loans for a significant period of time,
Mosley testified that his depression and chronic back pain have frustrated his efforts to work, and thus his ability to repay
his loans, as well as to provide himself with shelter, food, and transportation, for several years. Mosley's medical problems
are confirmed by Dr. Iglesias's letter and not refuted by Educational Credit. Mosley's testimony that it has been difficult for
him to hold a job is also unrefuted and is corroborated by his Social Security earnings statements. He testified that his back
problems preclude him from heavy lifting, which rules out most of the jobs available in the labor pool from which he seeks
work. Exacerbating the problem, his medications make it difficult for him to function. He did not finish college and has been
unable to complete the training necessary to learn a trade. Mosley relies on public assistance programs for health care and
food, and the bankruptcy court had before it sufficient evidence to support a finding that there is no reason to believe that
Mosley's condition will improve in the future. Mosley's evidence of medical problems, lack of skills, and dire living conditions
support the bankruptcy court's finding that it is highly unlikely he will become able to repay his loans. See Educ. Credit

Mgmt. Corp. v. Nys, 446 F.3d 938, 947 (9th Cir.2006) (relevant “additional circumstances” include debtor's serious physical
or mental disability, lack of usable or marketable job skills, and lack of assets that could be used to pay the loan).
 [10] [11]
[12] The bankruptcy court also correctly concluded that Mosley's testimony established the final Brunner requirement, that
he has made good faith efforts to repay his student loans. Mosley has not made payments since 1996, but a debtor's “failure
to make a payment, standing alone, does not establish a lack of good faith.” Polleys, 356 F.3d at 1311. Good faith is measured
by the debtor's efforts to obtain employment, maximize income, and minimize expenses; his default should result, not from
his choices, but from factors beyond his reasonable control. See In re Roberson, 999 F.2d 1132, 1136 (7th Cir.1993). Mosley
has attempted to find work, as demonstrated by the series of jobs he held while living with his mother from 1994 to 1999 and
his participation in the labor pool since 2000. Because of his medical conditions, Mosley has been largely unsuccessful, and
thus has not had the means even to attempt to make payments. As his Social Security statements show, his income has been
below the poverty line for years. He lives without a home and car and cannot further minimize his expenses. Mosley
produced sufficient evidence to support the bankruptcy court's conclusion that he has made good faith efforts to obtain work
so that he can support himself and repay his debts.
 [13] Educational Credit argues that the good faith requirement
obligated Mosley to attempt to negotiate a repayment plan under the Income Contingent Repayment Program (which adjusts
the debtor's payment in response to hardship and extends the repayment period to as much as 25 years) or seek an
administrative discharge based on disability before pursuing this undue hardship discharge in bankruptcy. While a debtor's
effort to negotiate a repayment plan certainly demonstrates good faith, see Frushour, 433 F.3d at 402-03, courts have
rejected a per se rule that a debtor cannot show good faith where he or she has not enrolled in the Income Contingent
Repayment Program. See Barrett, 487 F.3d at 364; Tirch, 409 F.3d at 682. Educational Credit points out that Mosley's
current payments under the Program would be zero, but the Program is not always a viable option for debtors like Mosley, as
it may require them effectively to “trad[e] one nondischargeable debt for another” because any debt that is discharged under
the program is treated as taxable income. Barrett, 487 F.3d at 364. In this instance, it is questionable whether Mosley even
knew about alternative repayment options, and, in light of his dire living conditions and persistent inability to obtain steady
work, the bankruptcy court had sufficient evidence from which to conclude that these options would not have provided
Mosley a realistic solution to his inability to pay. As the bankruptcy court observed, Mosley made inquiries about resolving
his student loan obligations with the United States Department of Education, the Georgia Student Finance Commission, the
Veterans' Administration, and his congressman. His failure to enroll in the Income Contingent Repayment Program or to
pursue other non-bankruptcy options with Educational Credit does not detract from the good faith he has demonstrated in
these inquiries and in his attempts to obtain work. We also reject Educational Credit's argument that Mosley exhibited bad
faith by failing to cooperate with discovery in this case. The court found that Mosley used his best efforts to answer
Educational Credit's interrogatories and file medical documentation with the court; that documentation was excluded
because Mosley did not know how to authenticate it, not because he was uncooperative in discovery. We affirm the
bankruptcy court's conclusion that Mosley has made good faith efforts to repay his student loans and would suffer undue
hardship if they were excepted from discharge.
 Finally, we review the district court's order denying Educational Credit's
motion to strike the supplemental order issued by the bankruptcy court after the notice of appeal was filed. The district court
concluded that the bankruptcy court lacked jurisdiction to enter the supplemental order but denied Educational Credit's
motion to strike because the supplemental order did not alter, but only elaborated on, the findings of fact and conclusions of
law the bankruptcy court had announced orally. Educational Credit reiterates its argument that the bankruptcy court lacked
jurisdiction to enter the supplemental order once Educational Credit had filed its notice of appeal, citing In re Combined
Metals Reduction Co., 557 F.2d 179, 200 (9th Cir.1977) (stating the “general rule ... that once a notice of appeal has been
filed, the lower court loses jurisdiction over the subject matter of the appeal” and holding that lower courts lacked
jurisdiction to vacate or modify an order under appeal).
 [14] [15] [16] The filing of a notice of appeal generally “confers
jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the
appeal.” Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982). An exception to this
rule exists, however, where the lower court acts in aid of appellate review, and a lower court has jurisdiction to reduce its
oral findings to writing even if a party has filed a notice of appeal in the interim. See Silberkraus v. The Seeley Co. (In re
Silberkraus), 336 F.3d 864, 869 (9th Cir.2003) (stating that “the bankruptcy court retained jurisdiction to publish its written
findings of fact and conclusions of law because they were consistent with the court's oral findings and because they aid us in
our review of the court's decision”). The bankruptcy court's supplemental order aided the district court's review and aids ours
in this case by explaining its findings with complete citations to the governing cases. Educational Credit asserts that the
order bolstered an otherwise inadequate record, but it does not point us to any specific instances of embellishment. Our
review of the supplemental order and the court's oral findings reveals that they are consistent; moreover, in the order
granting the discharge, the bankruptcy court stated that it reserved the right to enter supplemental findings. The
supplemental order did not vacate or modify the order on appeal, and the bankruptcy court had jurisdiction to issue it in this
 We AFFIRM both the bankruptcy court's order discharging Mosley's student loans and the district court's denial
of the motion to strike the supplemental order.

                                                                           CHAPTER 30: BANKRUPTCY LAW                    457

Case 30.3
337 B.R. 243, 19 Fla. L. Weekly Fed. B 113
United States Bankruptcy Court,N.D. Florida,
Pensacola Division.
In re Roger Allen BUIS & Pauline Reid Buis, Debtors.
No. 05-31164-LMK.
Jan. 11, 2006.
, Bankruptcy Judge.
This case came on for hearing on the motion of Army Aviation Heritage Foundation and Museum, Inc. (AAHF) to dismiss
this case or to convert it to a case under chapter 7. An evidentiary hearing was conducted at which AAHF urged the court to
convert the case instead of dismissing it. Conversely, the debtor asked that, if the Court was inclined to grant AAHF's
Motion, that their case be dismissed rather than converted to one under chapter 7. Based on the evidence presented, I find
that the case should be dismissed. This constitutes my findings of fact and conclusions of law in accordance with .
This chapter 13 case arose out of a dispute between the debtors, their operating company, Otto Airshows Inc. and AAHF.
The result was a lawsuit in which AAHF was granted summary judgment as to liability against the debtors and their
company for defamation and for violation of the Florida Unfair and Deceptive Trade Practices Act. The Debtor, Roger Buis, is
a retired Army helicopter pilot who still makes his living flying helicopters. In 2000, he and his wife purchased an air show
business consisting of a helicopter, a trailer, and props from Robert and Annette Hosking d/b/a A. & B. Helicopters. The
purchase price was $275,000, financed by the sellers on an unsecured basis. The debtors formed Otto Airshows and
decorated the helicopter as a clown (Otto the Clown). They performed in air shows and would take passengers on flights for
a fee.
In 2003, according to the Order granting summary judgment in Case No. 3:03 cv554/RV in the United States District Court
for the Northern District of Florida, the debtors began making allegations of safety deficiencies against AAHF, a competitor.
These allegations were made to the FAA, to the president of the International Council of Air Shows, a trade association that
represents individuals in the air show business, and to the Aircraft Owners and Pilots Association. AAHF filed its lawsuit
and on October 29, 2004, the Order granting summary judgment as to liability in favor of AAHF was entered. Following the
entry of the summary judgment, the debtors consulted a bankruptcy lawyer to assist them in bankruptcy planning to avoid
losing their assets to AAHF at such time as damages were assessed. On November 29, 2004, they executed a promissory
note and security agreement in favor of the Hoskings, securing the sum of $117,500 remaining on the purchase price *247 of
their business. As collateral, they pledged a Cessna 150 airplane and a Bell 47 helicopter, neither of which were part of the
purchase from the Hoskings. Both aircraft were unencumbered prior to the execution of the agreement. At the same time,
the debtors pledged another unencumbered aircraft, a Cessna 150 to W.H.F. Wiltshire, their attorney in the district court
litigation, as security for payment of his fees (although the debtors listed those fees as “disputed” in their bankruptcy
schedules). These liens were perfected by recordation with the FAA on January 21, 2005.
In April, 2005, the parties went to mediation in their lawsuit but were unsuccessful. At that time, the debtors ceased doing
business as Otto Airshows and formed a new corporation, Prop and Rotor Aviation, Inc., as part of their prebankruptcy
planning. Whereas the debtors had each been 50% owners of Otto Airshows, they gave their son 50% ownership in Prop and
Rotor. While the debtors continued to own the property used in the air show business, they entered into a Property
Management Agreement with Prop and Rotor to lease the property to the corporation and to operate it under the corporate
name. This agreement was prepared and executed in April or May of 2005 but backdated to November 24, 2004.
On May 19, the debtors filed the instant chapter 13 case and also filed a chapter 7 case for Otto Airshows. Their initial
chapter 13 plan in this case proposed to leave all of their secured creditors, except for Mr. Wiltshire, unimpaired, paying
them in accordance with the terms of their notes and security agreements. Mr. Wiltshire would receive his collateral with
any deficiency to be treated as an unsecured claim. Unsecured creditors would receive a pro-rata share, after payment of
trustees fees and expenses and $2,000 for debtors' attorney's fees, of $450.77 to be paid over 36 months. The plan made no
mention at all of AAFH or its claim. The schedules and statement of affairs (SOA) contained a number of significant
omissions, including the failure to list AAHF as a creditor at all. AAHF was scheduled in the filings for Otto Airshows, Inc.,

but not in this case. Additional omissions included the following:
1. The failure to list in item 10 of their SOA the transfers on November 29, 2004, of aircraft to secure existing debts;
2. The failure to list the Property Management Agreement with Prop and Rotor as either a lease or an executory contract;
3. The failure to list in item 4 of their SOA the settlement of a lawsuit on December 13, 2004, in which they received $55,000
(less fees for their attorney) or to account for disposition of the proceeds;
4. The failure to list a Kubota lawn tractor valued at $10,000 and a 7.5 KW generator valued at $400 on their schedules.
The debtors amended their schedules to correct the forgoing omissions on the day of the hearing on the instant motion.
They also filed an amended chapter 13 plan which proposed to surrender all of their aircraft and the pickup truck used to
tow their show helicopter to the secured creditors, and to pay $3260.65 per month to the chapter 13 trustee for 36 months.
Except for the debt to AAHF and the secured creditors, the debtors schedules reflect a total of $30,258.95 in unsecured debt
owed on three credit cards. When the undersecured portion of the claims of the secured creditors, as reflected in the debtors'
schedules, are considered, the total unsecured debt is $274,926.64 without even considering the claim of AAHF. AAHF
initially filed its proof of claim in the amount of $1,750,000 representing unliquidated*248 damages it was seeking in the
lawsuit against the debtors. It subsequently filed an amended proof of claim on November 10, 2005 reflecting a liquidated
amount of $238,282.89, representing attorney's fees incurred in the litigation and assessable against the debtors as a result
of the summary judgment as to liability. If determined to be a liquidated, non-contingent claim, the AAHF claim, when
added to the other scheduled unsecured claims would put the total well over the $307,675 eligibility requirement as
contained in .
The motion and supporting memoranda of AAHF assert two grounds for conversion (or dismissal) of this case. It asserts
that the case was filed in bad faith in an effort to avoid payment to AAHF for their defamatory conduct and unfair trade
practices and that they are not eligible to be debtors under chapter 13. Based on the facts as set forth herein and on the
debtor's admission in court that but for the lawsuit, they would not have filed bankruptcy, I conclude that the debtors are not
eligible for chapter 13 relief and that this case was filed in bad faith as to AAHF.
AAHF first argues that the debtors' case should be dismissed or converted to chapter 7 because the debtors are ineligible to
be debtors under chapter 13 due to the size of their unsecured debt. provides that “[o]nly an individual with regular income
that owes, on the date of the filing of the petition, noncontingent, liquidated, unsecured debts of less than $307,675 ... may be
a debtor under chapter 13 of this title.” . Although the debtors list only $30,258.95 in unsecured debts in their schedules, it
is well settled that the unsecured portion of a chapter 13 debtor's undersecured debt must also be included with other
unsecured debt for purposes of determining whether debtor's total unsecured debt exceeds the $307,675, rendering him
ineligible to be a chapter 13 debtor. See ; . As a result, the amount of noncontingent, liquidated, unsecured debts
scheduled by the debtors is $274,926.64, which is $32,748.36 below the limit.
AAHF claims attorney's fees of $238,282.89 incurred in its litigation against the debtor for violation of the Florida Unfair
and Deceptive Trade Practices Act. Adding this amount to the debtors' scheduled unsecured debt would increase the debtors'
total unsecured debt owed as of the date of the petition to $513,209.53, well over the limit. This amount will properly be
added in if the debt for attorney's fees is both noncontingent and liquidated. Since summary judgment was granted to AAHF
by the district court as to liability, AAHF's entitlement to attorney's fees is established under . A debt is not contingent
“where all events giving rise to a debtor's liability occur pre-petition,” (citations omitted). The event giving rise to the
debtors' liability for attorney's *249 fees occurred pre-petition upon the District Court's grant of summary judgment to
AAHF as to the liability of the debtors under the Florida Unfair and Deceptive Trade Practices Act. Therefore, the only
remaining question before me in determining the debtors' eligibility to file under chapter 13 is whether or not the claim for
attorney's fees represents a liquidated claim.
           Although AAHF also asserted attorney's fees under , which is analogous to , there was no finding by the District
          Court nor any showing that all the procedural requirements (i.e. service of motion 21 days prior to filing, or even the
          filing of a motion at all) have been met. Although AAHF may not be entitled to fees under , it is certainly entitled
          to them under .
Because the debtors filed their bankruptcy petition, AAHF was unable to obtain a specific amount ordered by the District
Court, but this does not necessarily mean that AAHF's claim for attorney's fees is unliquidated. “A liquidated debt is that
which has been made certain as to amount due by agreement of the parties or by operation of law.” (citing Black's Law
Dictionary 930 (6th ed.1990)). The concept of a what is a liquidated debt is therefore linked to the amount of liability, rather
than its mere existence.       A claim is unliquidated if the amount of the debt is dependent on a “future exercise of discretion,
not restricted by specific criteria.” In the IRS asserted that the debtor was ineligible for relief under chapter 13 because the
deficiency he owed to the IRS put him above the debt limitations in place at that time. The debtor argued that his tax
liabilities were not liquidated on the petition date because the notice of deficiency he had received establishing the debt was
insufficient to allow the bankruptcy court to readily ascertain the amount of the debt. The bankruptcy and district courts
agreed with the debtor, but the Eleventh Circuit reversed, holding that because the debt was computed through the
                                                                               CHAPTER 30: BANKRUPTCY LAW                       459

application of fixed legal standards set forth in the tax code, it was liquidated.    Accordingly, a debt may still be considered
liquidated if it is dependent on a future exercise of discretion, as long as such an exercise of discretion is restricted by specific
, part of the Florida Unfair and Deceptive Trade Practices Act, provides that the prevailing party in a lawsuit under this Act
may “receive his or her reasonable attorney's fees and costs from the nonprevailing party,” (emphasis added). The statute
further provides the method under which the prevailing party obtains such fees, which requires the attorney involved to
submit a sworn affidavit of his time and costs. . The Florida Supreme Court has directed state courts (and presumably
federal courts applying state law) to apply factors set forth in Disciplinary Rule 2-106(b) in order to determine the
reasonableness of fee awards. . Although the exact amount of the debt for attorney's fees is dependent on a future exercise
of discretion by the District *250 Court, such a determination is restricted by this specific criteria and is not left to the
District Court's unfettered discretion. Accordingly, a prior adjudication of “reasonableness” is not required in order to deem
a claim for attorney's fees and costs “liquidated” for the purposes of eligibility. (holding amount of attorney's fees award
was liquidated since the future exercise of discretion was restricted to a consideration of the listed factors). Since AAHF's
attorney's fees and costs are capable of “verification against fixed legal standards,” the amount of the debt is not dependent
on the future exercise of unrestricted discretion, and the debt for attorney's fees is therefore liquidated. In any event,
although it is conceivable that the District Court would not find the entire amount requested of $238,282.89 to be reasonable,
it is inconceivable that it would find a reasonable amount to be less than the $32,748.36 difference between the amount of
the other unsecured debt and the eligibility amount, especially given that the debtors' own attorney's fees in defending the
action brought by AAHF total over $180,000. Because the debt for attorney's fees is both noncontingent and liquidated,
$238,282.89, the amount of such debt, must be added to the debtors' unsecured debt. The amount of the debtors' unsecured
debts, $513,209.53, is above the maximum allowed under ; therefore, the debtors are ineligible to be debtors under chapter
            (1) The time and labor required, the novelty and difficulty of the question involved, and the skill requisite to
          perform the legal service properly.
          (2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other
          employment by the lawyer.
          (3) The fee customarily charged in the locality for similar legal services.
          (4) The amount involved and the results obtained.
          (5) The time limitations imposed by the client or by the circumstances.
          (6) The nature and lent of the professional relationship with the client.
          (7) The experience, reputation, and ability of the lawyer or lawyers performing the services.
          (8) Whether the fee is fixed or contingent.
In addition to this case being dismissed because the debtors are ineligible, the debtors' case will also be dismissed for bad
faith. provides that a chapter 13 case may be dismissed or converted “for cause.” . further provides a nonexclusive list of
examples of what constitutes “cause” for dismissal. Although bad faith, or a lack of good faith, is not included in this list,
bad faith can constitute cause for dismissal under . ; ; ; ; . The Bankruptcy Code imposes the requirement of good faith
upon a debtor at both the time of the filing of the petition and at the time of the filing of the plan.         “Good faith” is not
defined by the Bankruptcy Code, but rather must be determined on a case-by-case basis through a consideration of the
totality of the circumstances. .
In most cases, any inquiry into a chapter 13 debtor's good faith or lack thereof is conducted in conjunction with the hearing
on the confirmation of the plan. . The leading cases out of the Eleventh Circuit, and both focus on good faith in the
proposition of the plan rather than in the initial filing of the petition.     While good faith is an implicit requirement in the
filing of a petition under chapter 13, it is an explicit requirement for the confirmation of a chapter 13 plan. The Bankruptcy
Code provides, in relevant part, that “the court shall confirm a plan if ... the plan has been proposed in good faith ...” . To
aid courts in determining*251 whether or not a plan has been proposed in good faith, the Eleventh Circuit articulated the
following factors as being relevant to this inquiry:
 (1) the amount of the debtor's income from all sources;
(2) the living expenses of the debtor and his dependents;
(3) the amount of attorney's fees;
(4) the probable or expected duration of the debtor's Chapter 13 plan;
(5) the motivations of the debtor and his sincerity in seeking relief under the provisions of Chapter 13;
(6) the debtor's degree of effort;
(7) the debtor's ability to earn and the likelihood of fluctuation in his earnings;

(8) special circumstances such as inordinate medical expense;
(9) the frequency with which the debtor has sought relief under the Bankruptcy Reform Act and its predecessors;
(10) the circumstances under which the debtor has contracted his debts and his demonstrated bona fides, or lack of same, in
dealings with his creditors;
(11) The burden which the plan's administration would place on the trustee;
Additional relevant factors the Eleventh Circuit has considered include the type of debt to be discharged and whether such
debt would be nondischargeable under Chapter 7 as well as the accuracy of the plan's statement of debts and expenses and
whether any inaccuracies are an attempt to mislead the Court. .
Although the instant case is not yet up for consideration of confirmation, the factors are still relevant in determining
whether the plan, which was filed along with the petition, and the petition itself were filed in bad faith. The motivations,
sincerity, and effort of the debtors, combined with the circumstances under which they came to file bankruptcy and their
dealings with their creditors, AAHF in particular, clearly shows that the plan proposed by the debtors was not proposed in
good faith. Indeed, the very language of the initial plan filed by the debtors demonstrates that both the plan and this case
were filed in bad faith.        That was the plan that left all of their secured creditors (except for their former attorney)
unimpaired, paying them according to the terms of their notes and security agreements, including the undersecured portions
of their claims, but paid unsecured creditors a total of $450.77 to share, pro-rata, over a period of 36 months. AAHF was not
even mentioned in this plan. This demonstrates that both the petition and the plan were filed in bad faith.
The factors, which are considered in the context of plan confirmation, overlap somewhat with the factors that courts
consider when determining whether a petition was filed in bad faith, which is the issue currently before this court. In
connection with the totality of the circumstances determination of bad faith in the filing of the petition, courts have
considered some or all of the following factors:
(1) the nature of the debt, including the question of whether the debt would be nondischargeable in a Chapter 7 proceeding;
(2) the timing of the petition;
(3) how the debt arose;
(4) the debtor's motive in filing the petition;
(5) how the debtor's actions affected creditors;
*252 (6) the debtor's treatment of creditors both before and after the petition was filed;
(7) whether the debtor has been forthcoming with the bankruptcy court and the creditors (citations omitted);
(8) whether the debtor misrepresented facts in her petition, unfairly manipulated the Bankruptcy Code, or otherwise filed
her Chapter 13 petition in an inequitable manner;
(9) the debtor's history of filings and dismissals;
(10) whether the debtor only intended to defeat state court litigation;
(11) whether egregious behavior is present. (citations omitted).
A finding of bad faith does not require a finding of actual malice or fraudulent intent.           In considering the totality of
circumstances surrounding the debtors' filing of their petition, it is clear to me that this case was filed in bad faith and
therefore should be dismissed.
          Some courts hold that a chapter 13 case should not be dismissed for lack of good faith prior to consideration of a
          chapter 13 plan. See, e.g., . However, the Eleventh Circuit in stated that “whenever a chapter 13 petition appears
          to be tainted with a questionable purpose, it is incumbent upon the bankruptcy courts to examine and question the
          debtor's motives.” Accordingly, although chapter 13 cases should not ordinarily be dismissed for lack of good faith
          prior to consideration of the chapter 13 plan, under circumstances in which the petition appears to be “tainted” with
          bad faith, such as this one, dismissal prior to formal consideration of the plan is appropriate. See, e.g., .
First, the debtors did not accurately state their assets and liabilities on their initial bankruptcy petition. The debtors failed
to list AAHF as a creditor, which is especially hard for the court to comprehend when the debtor admitted that it was
AAHF's judgment that pushed them into bankruptcy. The debtors listed income on their schedules from “[r]ent from
personal property lease,” but did not list any such lease on Schedule D and did not report any income from leases in their
statement of financial affairs or list any agreement with Prop and Rotor anywhere in their schedules or SOA. The debtors
also did not disclose the $55,000.00 personal injury settlement they received pre-petition.           In addition to all of these
omissions, the debtors also “forgot” about a Kubota lawn tractor worth $10,000 and their generator, worth $400. The
debtors did not amend their schedules to reflect any of this until the day of the hearing on this motion.
Next, the timing of the debtors petition leads to the conclusion of bad faith, in two ways. First, the debtors filed their
chapter 13 petition after they were found liable in the District Court Action and after an unsuccessful mediation with AAHF,
but before a final judgment could be entered. This is why only the amount for attorney's fees was included when considering
the amount of the debtors' unsecured debts above. It appears to me that the timing of the bankruptcy filing was an
ultimately futile attempt to keep the debtors eligible to file for relief under chapter 13, because the debts owed to AAHF
would be dischargeable in a chapter 13 (but nondischargeable in a chapter 7) because of the so-called chapter 13 “super
                                                                             CHAPTER 30: BANKRUPTCY LAW                     461

discharge.” See (holding claim for violation of Florida Unfair and Deceptive Trade Practices Act was nondischargeable in a
chapter 7). The other reason the timing of the petition is suspect involves the grant of security interests in previously
unencumbered assets to secure pre-existing*253 (and previously unsecured) debts. While the granting of these security
interests may not be have been fraudulent transfers as a matter of law, they certainly would have been preferences subject
to avoidance under had they been made within 90 days of the filing of the petition. All of these transfers appear to have
been made between 90 and 120 days pre-petition. Thus, the debtors granted these security interests, made sure they were
perfected, waited 90 days so they would “stick,” then filed their petition. The debtor admitted that he began planning to
avoid AAHF's judgment through a Chapter 13 bankruptcy shortly after the adverse ruling on summary judgment in the
District Court. The timing of the bankruptcy petition further demonstrates both the debtors' attempt to continue in their
pre-petition pattern of egregious behavior towards AAHF and their bad faith in filing their petition.
Because I have determined that the debtors are ineligible to be debtors under Chapter 13 and that their petition was filed in
bad faith, the only issue left is whether to convert this case to one under chapter 7 or dismiss it altogether. The decision to
dismiss or convert a chapter 13 case under is within the discretion of the bankruptcy court. . In deciding between
conversion and dismissal, a court must consider “the best interests of the creditors and the estate.” . AAHF urges the court
to convert the case, while the debtors argue for dismissal rather than conversion. AAHF asserts that a chapter 7 trustee is
needed to investigate unscheduled assets, the disposition of assets, and allegedly preferential or fraudulent transfers.
However, as mentioned above, any transfers that the debtors made that have been brought to the court's attention were
either outside of the statutory preference period or not fraudulent as a matter of law. From a review of the debtors'
amended schedules, there appear to be minimum unencumbered assets available for liquidation and distribution to
unsecured creditors. Further, no other creditor has appeared in this case, and AAHF is the only creditor to have brought
suit against the debtors pre-petition. The dismissal of this case would allow AAHF to get a final judgment issued by the
District Court and then execute upon it. None of the purposes of the Bankruptcy Code would be served by converting the
debtors' case to one under chapter 7 against their will. The money collected from a liquidation of the debtors' non-exempt
and unencumbered property would be eaten up with fees and expenses, especially if the trustee was to embark upon the kind
of inquiry suggested by AAHF. Should the case be converted to chapter 7, the court would merely be serving either as a
vehicle to punish the debtors or as a collection service for AAHF. Neither is an efficient or appropriate use of this court's
resources. Accordingly, I conclude that dismissal of this case, rather than conversion, is in the best interests of the creditors
and of the estate.
The total amount of the debtors' unsecured debt (consisting of the scheduled unsecured debt, the scheduled unsecured
portion of undersecured debt, and attorney's fees owed to AAHF) render the debtors ineligible for relief under chapter 13.
Further, the debtors filed their petition in bad faith and it is in the creditors' and estate's best interests that this case be
dismissed rather than converted to a case under chapter 7. Accordingly, it is hereby
ORDERED and ADJUDGED that AAHF's Motion is GRANTED. A separate*254 final order will be entered in accordance

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